Multiple choice

1. Candy purchase a life insurance policy. Six months later, Candy falls into a severe depression and kills herself. Which of the following statements is true?

A. Life insurance will pay nothing, as there was death by suicide less than two years after purchasing the policy.

B. Life insurance will pay unless the suicide was an assisted suicide and the person assisting was the beneficiary of the policy.

C. The life insurance will pay double under the double indemnity provision.

D. Life insurance will pay proceeds if there's evidence that Candy suffered from a diagnosed psychological condition that accounts for why she committed suicide.

2. Tom is a family farmer with less than $3 million in debt. He wants to know if there are any chapters in the bankruptcy code specifically geared to debtors such as him. You would recommend to him Chapter

A. 12.

B. 11.

C. 13.

D. 7.

3. Tom's life insurance has no cash surrender value. It must be

A. term life insurance.

B. straight life.

C. endowment.

D. limited-payment life insurance

4. Tom gave a mortgage to Big Bank. Big Bank failed to record the mortgage. Then Tom gave a mortgage to Second Bank. Second Bank recorded the mortgage and didn't know about the mortgage to Big Bank. After Second Bank recorded, Big Bank recorded its mortgage. After both mortgages are recorded, Tom defaults on both debts. Which of the following statements is true?

A. If these are the only two mortgages on the property, they'll share the proceeds pro-rata based on the amount due each.

B. Tom doesn't owe the debt to Big Bank because Big Bank failed to record the mortgage promptly.

C. Big Bank has a first mortgage.

D. Second Bank has a first mortgage.